InnovAge (US:INNV)2025-05-06 21:23Participant and Service Overview - As of March 31, 2025, InnovAge served approximately 7,530 PACE participants across 20 centers in six states[128] - The average risk adjustment factor (RAF) score for participants is 2.46, indicating a higher acuity population compared to Medicare Advantage participants[136] - The average participant tenure was 3.1 years as of March 31, 2025, with a low voluntary disenrollment rate of 6.9% annually over the last three fiscal years[136] - The company operated 20 PACE centers as of March 31, 2025, an increase from 19 centers in the previous year[173] - Total member months increased to 66,130 for the nine months ended March 31, 2025, compared to 60,030 for the same period in 2024[173] Financial Performance - Total revenues for the nine months ended March 31, 2025, reached $632.3 million, up $67.8 million, or 12.0%, from $564.5 million for the nine months ended March 31, 2024[151] - Capitation revenue for the three months ended March 31, 2025, was $217.8 million, an increase of $25.1 million, or 13.0%, compared to $192.8 million for the same period in 2024[150] - The increase in capitation revenue for the three months ended March 31, 2025, was driven by a $4.4 million increase in capitation rates and a $20.7 million increase in member months[150] - Center-level contribution margin rose to $112.4 million for the nine months ended March 31, 2025, up from $95.5 million in the prior year, reflecting a 12.0% increase in total revenue[177] - Adjusted EBITDA increased to $23.1 million for the nine months ended March 31, 2025, compared to $11.2 million for the same period in 2024[173] - The Adjusted EBITDA margin for the nine months ended March 31, 2025, was 3.7%, compared to 2.0% for the same period in 2024[181] Expenses and Costs - External provider costs represented approximately 82% of revenue for the nine months ended March 31, 2025[136] - InnovAge experienced increased costs of care per participant due to rising salaries, wages, and benefits, as well as third-party service provider costs[129] - Corporate, general and administrative expenses increased to $38.6 million for the three months ended March 31, 2025, up $11.0 million, or 40.1%, from $27.5 million for the same period in 2024[158] - Cost of care (excluding depreciation and amortization) for the three months ended March 31, 2025, was $69.5 million, an increase of $10.4 million, or 17.6%, compared to $59.1 million for the same period in 2024[154] - Total operating expenses for the nine months ended March 31, 2025, were $659.9 million, an increase of $77.1 million from $582.8 million for the same period in 2024[152] - Corporate, general and administrative expenses increased by $12.5 million, or 15.3%, to $94.2 million for the nine months ended March 31, 2025, compared to $81.7 million for the same period in 2024[159] Net Loss and Financial Position - Net loss attributable to InnovAge Holding Corp. for the three months ended March 31, 2025, was $11.4 million, compared to a net loss of $5.9 million for the same period in 2024[149] - Net loss attributable to the company was $30.3 million for the nine months ended March 31, 2025, compared to a net loss of $21.0 million for the same period in 2024[173] - The net loss margin increased to (4.8)% for the nine months ended March 31, 2025, compared to (3.7)% for the same period in 2024[173] Cash Flow and Debt - As of March 31, 2025, the company had cash and cash equivalents of $60.5 million, an increase of $3.6 million from June 30, 2024[188] - The company had $63.1 million of debt outstanding as of March 31, 2025, excluding $60.9 million under the Term Loan Facility, which matures on March 8, 2026[190] - For the nine months ended March 31, 2025, net cash provided by operating activities was $23.9 million, a significant increase of $62.6 million compared to a net cash used of $38.8 million in the same period of 2024[198] - The company incurred $0.4 million in costs associated with organizational restructure for the nine months ended March 31, 2025, and $2.6 million for third-party consultants in the same period of 2024[198] - The interest rate on the Term Loan Facility was 6.14% as of March 31, 2025, with variable interest rates exposing the company to market risk[207] Strategic Initiatives and Future Outlook - The company plans to invest in its centers and value-based care model to support long-term growth, expecting expenses to rise in the short term[137] - The company plans to continue investing in resources and initiatives to provide necessary and quality services to participants[189] - The company anticipates continued enrollment processing delays and eligibility gaps due to state-specific procedures, particularly in California[130] - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain available funds for business development and debt repayment[197] - Inflation has not had a material effect on the company's operating results, although future inflation could impact financial conditions[211]